The Muamalat Newsletter Vol. 2 2023

35 FEM eNewsletter | Dec 2023 deliver accountability to the public as the main stakeholder of these institutions. Further, the implication of unclear communication of the accountability poses hindrances to Malaysia to promote leadership to Organisationof IslamicCooperation (OIC) nations on the development models based on Islamic ethics promulgated via the AIV policy adoption. As such, the demonstration of accountability and social performance impacts of the institutions that delivers economic and social impacts is vital. The ability of Malaysia to demonstrate the quality of progressive Muslim society that possesses good governance could score the leadership role to more than 1 billion world Muslim population. Having a well-defined Performance Framework for institutions that operate within AIV implementation that communicates the institutions’ achievement of economic and social impacts that can be trusted is the way to achieve the leading role. Kamri et al. (2014) echoed the significance of AIV policy, which she considered as Islamic ethics implementation in governmental organisations. According to her, the institutionalisation of codes within an organization is thought to be necessary in influencing employee ethical behaviour. A code of ethics should be officially written as a reference for all employees and managers of all levels across all sectors in carrying out their duty (Weber, 1981:47-52; Bittel, 1989:289; Rafik Issa Beekun, 1997:58; Helms, 2000:282; Muhammad Loqman, 2001:276). However, the institutionalisation of codes is only starting point for creating the ethical climate in organization. For the policies to be internalized, education to boost awareness as well as the enforcement of the codes is vital. According toWotruba, Chonko & Loes’s (2001), ethical behaviour among employees is influenced by establishment, awareness, understanding, acceptant of the codes among the organizational members and finally creation of ethical climate within the organization. Despite this, she found no evidence of the implementation of accurate measures on the effectiveness of Islamic ethics implementation in organizations. Due to that, she called for researchers to examine the commitment of organizations from the public and private sectors in realizing the policies. The findings could contribute towards the betterment of the existing ethical culture. At the same time, an effective mechanism to manage the Islamic ethics could also be identified. For Shariah-based institutions, a Performance Framework could be developed taking the Lines of Defence (LOD) as the foundation. The Governing Body relates to the Board and Audit Committee to which the internal audit function is accountable and reports to. The First Line role relates to the process owners at the operational and functional level, while the Second Line role relates to compliance and risk management functions. The Third Line which is represented by the internal audit function hence evaluates the adequacy and effectiveness of the First and Second Lines and reports the same to the Board and Audit Committee. Further empowering of the Shariah governance organs and functions contribute to Balanced and Just society (ummatan wasatan). Further aim of this study is to identify ways to improve current risk management practice by looking at the implementations of LODs. For this, the research